Gas Prices Could Drop Under $3 a Gallon by October. But Is the Fuel Crisis Over?
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After reaching an all-time high of $5.02 this summer, the national average for a gallon of gas has plummeted to $3.70. At one in ten gas stations around the country, the price is below $3.
Why it matters
Soaring gas prices have been one of the biggest economic issues of 2022 and their decline could impact the midterm elections.
The price of gas could dip below $3 nationwide in October, although factors from hurricanes to the war in Ukraine make it hard to predict.
After a summer that saw gas prices soar to record highs in the US, prices have steadily declined. The national average for a gallon of unleaded on Sept. 14 was $3.70, according to AAA. In Arkansas, Louisiana, Mississippi and Texas, the average is already under $3.20 -- within spitting distance of the $3.17 national average recorded in September 2021.
In fact, the price for regular gasoline is now below $3 a gallon at one in 10 gas stations around the US, according to a report by GasBuddy. Several factors have fueled the decline, most notably the recent lower cost of crude oil. Gasoline demand typically subsides after Labor Day, according to AAA, and the organization says pump prices will likely continue to decrease.
"Less expensive oil usually leads to less expensive gas for drivers," AAA spokesperson Andrew Gross said in a statement. "This trend has helped pump prices fall steadily for three straight months and, with fall approaching, more markets could soon see prices below $3 per gallon."
Here's what you need to know about gas prices, including where they might go next, if they could spike again and what the White House is doing to keep them in check.
The average price at the pump is the lowest it's been since March 2022, thanks to lower demand coupled with lower oil prices. In the first week of August, crude oil dipped below $90 a barrel for the first time since Russia invaded Ukraine, and it's remained under $100 since then.
Though we're a far cry from the $2.60 a gallon average we saw in September 2019, we're only 53 cents a gallon shy of the $3.17 average seen this time last year. According to a report by GasBuddy, the nationwide average could reach $2.99 by late October.
Patrick de Haan, head of petroleum analysis at GasBuddy, admits we can't assume anything when it comes to the price of gas this year. "We've never seen anything like 2022 at the pump, highlighted by once-in-a-lifetime events including the ongoing Covid-19 pandemic, which caused myriad imbalances, exacerbated by Russia's war on Ukraine," de Haan said in an Aug. 9 blog post.
"While the recent drop in gas prices has been most welcomed, the issues that led to skyrocketing prices aren't completely put to bed," he added, "and still could lead prices to eventually climb back up, should something unexpected develop."
A nationwide average under $3 "might not be possible," de Haan told Money on Sept. 13. "Hurricanes, unexpected issues that arise, E.U. sanctions on Russian energy, economic concerns, COVID in China, if demand in the U.S. doesn't fall in autumn as it tends to do. There are so many different things that could change the outcome."
US Treasury Secretary Janet Yellen indicated that crude oil, responsible for more than half the cost of retail gasoline, could spike this winter because of new sanctions against Russia.
Why has gas been so expensive in 2022?
Russia's ongoing invasion of Ukraine is an obvious factor. According to the White House, the war raised gasoline prices by more than $1.70 per gallon at its peak. Even though the US doesn't import much crude from Russia, oil is traded on a global market and any change affects prices all over the world.
By June 13, gasoline had hit $5.02 a gallon -- a record dollar amount, though still lower than the 2008 peak of $4.14 once adjusted for inflation.
But the Russian invasion isn't the only factor: Even though demand is nearing pre-pandemic levels, producers are still hesitant to increase production.
"We've had a supply-and-demand imbalance for a while," Troy Vincent, a senior market analyst at energy analysis firm DTN, told CNET. "And it will remain, regardless of whether this conflict goes away."
President Joe Biden has also accused top oil companies of profiteering.
"Amid a war that has raised gasoline prices more than $1.70 per gallon, historically high refinery profit margins are worsening that pain," Biden wrote in a June 15 letter to the heads of Exxon Mobil, Chevron, Shell and other companies.
What has the Biden administration done to lower gas prices?
In March, the White House began releasing 1 million barrels of oil a day from the US Strategic Petroleum Reserve. The unprecedented withdrawal was expected to last for six months and lower gasoline prices between 10 and 35 cents a gallon.
In April, the Environmental Protection Agency approved year-round sales of E15 gasoline, a cheaper, higher-ethanol fuel. The impact was modest, as only about 2,500 of the more than 100,000 US gas stations sell it.
The US is also looking at getting energy products from other sources: Biden went to Saudi Arabia earlier this month, in part to encourage the kingdom to increase output. But it and other OPEC nations say they're already pumping at full throttle.
Relief isn't likely to come from outside OPEC, either: This year, major oil companies like Shell, BP and Exxon Mobil are expected to invest half of what they did in production a decade ago.
The Biden administration has been working to improve diplomatic relations with Venezuela, which has been banned from selling oil to the US since 2018. And the White House is negotiating another nuclear nonproliferation treaty with Iran, which could bring Iranian oil back onto the market.
How can drivers save at the pump?
Though gas prices are going down, they're still higher than usual. You can cut down on nonessential trips and shop around for the best price, even crossing state lines if it's convenient.
Apps like Gas Guru scan for the best gas prices in your region. Others, like FuelLog, track your car's gas mileage and can help determine if it's getting decent fuel economy. In addition, many gas station chains have loyalty programs, and credit cards have rewards programs that give cash back for gas purchases.